The Theory of the Growth of the Firm

Rating:
Summary: A richly rewarding read
Review: I find myself springing to the defense of this book, because when I read it - right through - it was with a sense of appreciation for its acumen. Penrose's terminology is a little idiosyncratic but it does not take long for the reader to adjust. Moreover, when reading it with the circumstances of actual companies in mind, it presents a way to gain insight into their histories. One other way to express this is that my notes on this book are very detailed and lengthy. I didn't make these notes simply because the book is a "classic".

Rating:
Summary: A richly rewarding read
Review: I find myself springing to the defense of this book, because when I read it - right through - it was with a sense of appreciation for its acumen. Penrose's terminology is a little idiosyncratic but it does not take long for the reader to adjust. Moreover, when reading it with the circumstances of actual companies in mind, it presents a way to gain insight into their histories. One other way to express this is that my notes on this book are very detailed and lengthy. I didn't make these notes simply because the book is a "classic".

Rating:
Summary: Analytical value lost in muddled communication
Review: The usefulness of any book is based not only on the content of ideas presented, but also in the way those ideas are communicated. Unfortunately, this book is lacking in clarity and succinctness. An example will best illustrate my concern. In discussing criteria for defining firms, the author states, "I doubt whether any rules could be laid down for the application of the criteria which would obviate the necessity of judgement in individual cases, with the consequent differences of opinion." Perhaps she means, "I doubt whether rules can be applied that would allow individual cases to be judged without giving rise to differences of opinion." Or perhaps she means that "judgement of individual cases requires criteria that are not easily agreed upon, thus preventing the development of generalizable rules." Or perhaps, "Firms vary considerably in their form and structure, making the development of universal rules impossible." Either way, the reader must interpret what the author really means.

The above example is by no means an isolated one. Even the most astute reader will find himself rereading entire passages in an effort to understand the meaning. With thousands of business and economics texts addressing issues of strategy, organizational structure, and firm behavior, one simply does not have the time to struggle through poorly worded theory.

Rating:
Summary: Ground-Breaking and Fascinating
Review: This book helped provide the foundation for what has become known as the resource-based view of the firm (RBV). Back in 1959, when the male gender dominated the economics discipline, Ms. Penrose set out to answer this question: Was there "something inherent in the very nature of any firm that both promoted its growth and necessarily limited its RATE of growth."

I found this book so interesting and helpful (I am a business appraiser) that I read it twice. This led me into studying the resource-based view of the firm.

I recommend this book for anyone interested in the broad topics of business strategy and management. Related books that I recommend include "Contemporary Strategy Analysis," by Robert Grant; "Modern Competitive Analysis, by Sharon Oster; and "Why Firms Succeed," by John Kay.